Shares of AOL Inc fell about 2 percent on their return to trading on the New York Stock Exchange on Thursday, following the Internet company's spin-off from Time Warner Inc, while shares of AOL's former parent rose.

The stock was expected to come under pressure, as holders who were former Time Warner investors might have large-cap or dividend-yield requirements that force them to unload AOL shares.

Miller Tabak analyst David Joyce said, however, that the near-term turbulence following the spin-off could create an entry opportunity for a cheap stock. He initiated AOL coverage with a buy rating and a $32 price target.

That compared with AOL's early afternoon share price of $23.15, down 2.2 percent.

Higher valuations will rely on investors' confidence improving over time that AOL is executing on its content and advertising strategy, Joyce said in a client note.

AOL Chief Executive Tim Armstrong was at the opening bell ceremony on the NYSE to mark his company's return to trading, and he has tried to position the company as an online content and advertising investment.

But Wall Street and investors have been concerned about AOL's ability to turn around in the face of an advertising slump and competition from other Internet companies like Yahoo Inc.

Meanwhile, Time Warner shares appeared to benefit from the end of its failed nine-year experiment to integrate traditional media with Internet distribution. Its stock was up 4.4 percent to $30.51.

There was building interest in the stock because it's trading below its peers, but investors were waiting for AOL to be spun out before getting in, Collins Stewart analyst Thomas Eagan said of Time Warner.

In an internal memo to staff, Time Warner CEO Jeff Bewkes said the company is returning to its roots as a content-focused company.

Time Warner is home to cable networks like HBO, CNN, TNT and TBS; magazines like Time, People and Sports Illustrated; and Hollywood studio Warner Bros. The AOL spin-off comes after Time Warner did the same with Time Warner Cable Inc in March.

Bewkes said Time Warner will drive stockholder returns by paying a healthy dividend, buying back our stock and continuing to evaluate opportunities to make strategic acquisitions that meet our stringent standards.

AOL was added to the Standard & Poor's MidCap 400 index after the close of trading on Wednesday, replacing Imation Corp.

(Reporting by Yinka Adegoke, additional reporting by Chuck Mikolajczak; editing by Gerald E. McCormick)